Payday Loans: Va GOP Leads The Way
If Virginia succeeds in pushing the payday loan industry out of the state, or at least rolling back its excesses to protect those who get sucked into a never-ending cycle of interest payments at usurious rates, credit the Republican leaders of the House--the very same folks who started out this legislative session in Richmond intent on highly partisan obstructionism.
House Speaker Bill Howell of Stafford County and others in the House leadership reached a compromise earlier this week--supported by key Democrats and the Black Caucus in the House, though not yet by Senate Democratic leaders more friendly to the payday loan industry-- that would cap interest rates at 36 percent. That's plenty high for just about everyone else on the planet, but not for payday loan companies. They have said for months that such a cap would force them to shut down their Virginia stores. This "is not a compromise that the industry can live with," lobbyist Reggie Jones told a House committee Tuesday.
Senate Majority Leader Dick Saslaw of Fairfax contends, as do industry lobbyists, that in states that have banned payday loans, the number of bankruptcies has shot up--a sign that the loans, however pernicious their interest rates, serve a purpose. But Saslaw is also frank enough to note that legislators sometimes make political decisions--not quite an admission that the industry's generous giving to political candidates is effective, but close enough.
One of the most important pieces of the House compromise is a limit that would be put on all customers, restricting them to five payday loans, no matter how many shops they might go to. In the past, D.C. area residents could get around such restrictions simply by crossing the Potomac River to another jurisdiction's payday loan shops. But now that the District has banned payday loans, that option would no longer be available.
Will the Senate stand in the way of reform that would protect people who fall victim to an industry that preys on people who are at their most desperate? It took bipartisan effort in the House--and that's usually the Senate's specialty.
By Marc Fisher |
February 7, 2008; 3:04 PM ET
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